President Joe Biden’s US Jobs Plan, which is integral to his agenda to build an economy that empowers workers and families in the United States, promises unique investments in the long-neglected safeguards of our economy. Part of the package has raised the particular anger of corporate lobbyists and laissez-faire conservatives: raising the corporate tax rate to 28%. But the White House should maintain its resolve.
Unless Biden uses this moment to curb corporate profits and power, he won’t be able to secure the historic gains for workers and families his constituents expect of him. If he holds the line, Biden could usher in a new era of rebuilding for those long left behind.
Today, Americans overwhelmingly support raising corporate tax rates to fund the President’s vision for rebuilding our nation’s infrastructure. The landscape of corporate market power is also radically different today than it was five years ago. With the help of Trump’s anti-regulation agenda, big corporations have gargantuan market power – and the past year exposed the negative consequences of this over-focused power, including inefficient and unfair windfall profits.
Low corporate tax rate helps the rich
Last year, as more Americans died than in any year in history, and we faced one of the biggest job shortages since the Great Depression, businesses racked up losses. huge profits. At least 55 of the largest corporations paid nothing in federal taxes on more than $ 40 billion in profits. In a year that devastated American workers and families, multinational corporations racked up countless tax dollars in offshore tax havens that could have been invested in wages, schools, roads and creation. jobs. We can right this injustice.
Earlier this month, Treasury Secretary Janet Yellen called for a minimum global corporate tax rate. If successfully implemented, this move would end offshore tax havens through which multinationals amass their wealth and encourage US-based companies to deepen their investments in US markets. And while the notion of a global minimum corporate tax rate met with stiff opposition from Congress during the Obama administration, the political climate is markedly different this time around, in part because corporate tax avoidance is clearer than ever.
Of course, there are the opponents who are swimming against the tide of our country’s economic recovery. Some Republicans have simultaneously decried deficit spending and rising revenues through corporate tax rate hikes as prohibitively expensive to the U.S. economy. But the numbers don’t lie: Low corporate tax rates aren’t helping American workers and families.
When Trump cut the corporate tax rate from 35% to a paltry 21% in 2017, workers saw gains close to zero; foreign investors have benefited much more. But as expected, these tax cuts have added to the corporate profits these companies make from ordinary Americans. Worse yet, these benefits massively benefit the richest 10% of households and white families.
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An increase in the corporate tax rate from 21% to 28% still puts the rate lower than it was just after the Pearl Harbor attack until Trump’s sweeping 2017 tax law. Even at 28%, corporations will still benefit from historically low tax rates and not contribute their fair share. But they will pay more than they do now, which will rebalance and help fuel a people-centered American economy.
Business investment for the public good
If he raises the national corporate tax rate and sets a global minimum corporate tax, Biden may mark the start of a new era for America; one in which the rich fund large-scale public investments that provide America with the physical, social, and human infrastructure that meets its needs. This historic redistribution of corporate wealth accumulated for a long time will make it possible to obtain the gains necessary for the development of American families, in particular a permanent family allowance and job creation in addition to a stronger national infrastructure.
The President’s many plans – the American Rescue Plan, the American Jobs Plan, and the upcoming American Families Plan – all function as powerful rebuttals to the Reagan-era austerity policies that choked our economy and held back communities of color for generations. With the backing of even the most unlikely of stakeholders, like Amazon CEO Jeff Bezos, the president must break down barriers to his historic agenda and force companies to contribute to the economy they so easily exploit.
If Biden is firmly committed to raising the corporate tax rate to 28%, it will create millions of new jobs, revive America’s manufacturing sector, and pave the way to prosperity for workers and families long left behind. He will be remembered as a president who invested in our children, our workers and our infrastructure, and ultimately helped build an economy that works for everyone – across all classes and races.
Indivar Dutta-Gupta is Co-Executive Director of the Georgetown Law Center on Poverty and Inequality and Assistant Professor of Law at Georgetown Law. Follow him on Twitter: @IndivarD